Customers shop for fruits at a supermarket in Seoul, Feb. 2. Yonhap

Korea's retail sales, a key indicator of private spending, fell by the most in 21 years in 2024, marking the third consecutive year of decline, despite solid industrial output, data showed Monday.

Retail sales fell 2.2 percent on-year as sales of both durable and nondurable goods, particularly food, lost ground amid high inflationary pressure, according to the data compiled by Statistics Korea.

It was the largest annual decline since 2003, when retail sales fell 3.2 percent on-year.

The downward trend has now continued for three consecutive years, following a 0.3 percent drop in 2022 and a 1.4 percent decline in 2023.

"This marks the longest losing streak since retail data has been compiled," an agency official said, emphasizing that the figures indicate sluggish domestic demand. The agency began compiling relevant data in 1995.

In contrast, industrial output grew 1.7 percent in 2024 compared to the previous year, driven primarily by strong demand for semiconductors.

This marks the third consecutive year of growth and an acceleration from the 1 percent on-year increase recorded in 2023.

Notably, output from the manufacturing sector surged 4.1 percent on-year in 2024, a turnaround from a 2.6-percent drop a year earlier, largely attributed to a sharp rise in new export orders.

Outbound shipments in the manufacturing industries rose 4 percent in 2024 but fell 2 percent in domestic sales, the agency said.

Facility investment also rebounded, rising 4.1 percent on-year in 2024, supported by increased demand for semiconductor-related machinery, a sharp turnaround from a 5.5 percent decline the previous year.

In an effort to boost domestic demand, the finance ministry said the government will accelerate major policy initiatives through an 18 trillion-won ($12.2 billion) economic stimulus package and the swift execution of this year's budget.

In December alone, industrial output rose 2.3 percent from the previous month on strong demand for semiconductors and automobiles. The on-month gain follows three consecutive months of decline.

However, retail sales dropped 0.6 percent on-month, extending their losing streak to two months, the agency said.

The weak performance was primarily driven by a 6.7 percent decline in sales of nondurable goods, including automobiles.

Facility investment rose 9.9 percent from the previous month in December, continuing an overall upward trend. (Yonhap)